December 5, 2007
Dear Recipient:
The Sunset Advisory Commission would like your help in reviewing and improving the State’s transportation system. The Legislature, through the Texas Sunset Act, has charged our Commission with reviewing the mission and performance of the Texas Department of Transportation.
In general, the Sunset Commission periodically evaluates state agencies to determine if the agency is needed, if it is operating effectively, and if state funds are well spent. Based on the recommendations of the Sunset Commission, the Texas Legislature ultimately decides whether an agency continues to operate into the future. Additional information on the Sunset Commission can be found on our website.
As part of this agency’s review, we seek the input of organizations and individuals who have an interest in the agency. Please take some time to comment on the attached preliminary issues identified by the Sunset Commission staff as potential research areas. Also, let us know of other issues of interest to you or your organization. Feel free to share copies of this e-mail and the attachment with any others who may have an interest in the Texas Department of Transportation. To help ensure the free flow of information, anything submitted to Sunset staff during the review until the staff report is released is confidential, and will not be shared with anyone outside of Sunset staff.
To give the staff time to consider your information during our review of the Texas Department of Transportation, we request you send your response by Monday, January 7, 2008. Please mail, e-mail, or fax your comments to the address or fax number provided in the attached Preliminary Issue List. Also, if you need more information or have questions about our process, please contact Jennifer Jones at (512) 463-1300. We greatly appreciate your assistance and look forward to hearing your ideas.
Sincerely,
Ken Levine
Deputy Director
Sunset Advisory Commission
Thursday, December 06, 2007
Tribune Appeals Waiver Denial
By Radio INK - December 6, 2007
CHICAGO -Tribune Co. has filed an appeal of the FCC's denial of its request for indefinite waivers of the newspaper-broadcast cross-ownership ban with the U.S. Circuit Court of Appeals in the District of Columbia.
The FCC last week cleared the way for Tribune to complete its $8.2 billion buyout by granting Tribune waivers for two years, or six months after the end of litigation connected to the denial of open-ended waivers (or FCC Chairman Kevin Martin's ownership-rules revision), whichever is longer.
FCC Commissioner Michael Copps, who voted against the Tribune approval, predicted in his dissenting statement that the company would "run to the courthouse door" to trigger an automatic waiver of at least two years. "Presto!" he wrote "Tribune gets at least a two-year waiver plus the ability to go to court immediately and see if they can get the entire rule thrown out."
Tribune has grandfathered cross-ownership waivers in New York, Los Angeles, Chicago, Miami, and Hartford that wouldn't ordinarily have passed to its new owners, so it needed new waivers to complete its buyout deal. As part of the FCC's approval last week, Tribune got a permanent waiver of the cross-ownership ban in Chicago, where it owns its lone radio property, WGN-AM
Read more
CHICAGO -Tribune Co. has filed an appeal of the FCC's denial of its request for indefinite waivers of the newspaper-broadcast cross-ownership ban with the U.S. Circuit Court of Appeals in the District of Columbia.
The FCC last week cleared the way for Tribune to complete its $8.2 billion buyout by granting Tribune waivers for two years, or six months after the end of litigation connected to the denial of open-ended waivers (or FCC Chairman Kevin Martin's ownership-rules revision), whichever is longer.
FCC Commissioner Michael Copps, who voted against the Tribune approval, predicted in his dissenting statement that the company would "run to the courthouse door" to trigger an automatic waiver of at least two years. "Presto!" he wrote "Tribune gets at least a two-year waiver plus the ability to go to court immediately and see if they can get the entire rule thrown out."
Tribune has grandfathered cross-ownership waivers in New York, Los Angeles, Chicago, Miami, and Hartford that wouldn't ordinarily have passed to its new owners, so it needed new waivers to complete its buyout deal. As part of the FCC's approval last week, Tribune got a permanent waiver of the cross-ownership ban in Chicago, where it owns its lone radio property, WGN-AM
Read more
Media and Energy
By Faith Chatham - DFWRCC - Dec. 6, 2007
Today Media Consolidation and Energy are hot topics in Washington. Congressman John Dingell's assessment that the FCC has been "short-circuiting procedural norms" and failing to communicate appropriately with members, other legislators and the public is circulating through Washington and across America.
FCC Chairman Kevin Martin ignited a fire storm when he moved to allow consolidation of media in the same market. See HOUSE SUBCOMMITTEE TO INVESTIGATE FCC and HOUSE SUBCOMMITTEE TO QUESTION FCC ON MEDIA OWNERSHIP
On another front, privacy is a hot button for citizens. Advancements in technology now allow internet providors to track every website visited by their customers. See WATCHING WHAT YOU SEE ON THE WEB.
We continue with the same old leap frog pattern between technological advances, profit driven infringements, citizens outcry as privacy erodes, governmental regulations, lobbyist and citizen activists demands for advantages or remedies. It is prudent for citizens to keep tabs on these developments. What news we have access to through media in our hometowns and who watches what we read and write on the internet and how that information is used is up for grabs.
Today Media Consolidation and Energy are hot topics in Washington. Congressman John Dingell's assessment that the FCC has been "short-circuiting procedural norms" and failing to communicate appropriately with members, other legislators and the public is circulating through Washington and across America.
FCC Chairman Kevin Martin ignited a fire storm when he moved to allow consolidation of media in the same market. See HOUSE SUBCOMMITTEE TO INVESTIGATE FCC and HOUSE SUBCOMMITTEE TO QUESTION FCC ON MEDIA OWNERSHIP
On another front, privacy is a hot button for citizens. Advancements in technology now allow internet providors to track every website visited by their customers. See WATCHING WHAT YOU SEE ON THE WEB.
We continue with the same old leap frog pattern between technological advances, profit driven infringements, citizens outcry as privacy erodes, governmental regulations, lobbyist and citizen activists demands for advantages or remedies. It is prudent for citizens to keep tabs on these developments. What news we have access to through media in our hometowns and who watches what we read and write on the internet and how that information is used is up for grabs.
Watching What You See on the Web
New Gear Lets ISPs Track Users and Sell Targeted Ads;
More Players, Privacy Fears
By BOBBY WHITE - The Wall Street Journal - December 6, 2007
CenturyTel Inc., a Monroe, La., phone company that provides Internet access and long-distance calling services, is facing stiff competition from cellphone companies and cable operators. So to diversify, it's getting into the online-advertising business.
And not just any online advertising. The technology it's using could change the way the $16.9 billion Internet ad market works, bringing in a host of new players -- and giving consumers fresh concerns about their privacy.
CenturyTel's system allows it to observe and analyze the online activities of its Internet customers, keeping tabs on every Web site they visit. The equipment is made by a Silicon Valley start-up called NebuAd Inc. and installed right into the phone company's network. NebuAd takes the information it collects and offers advertisers the chance to place online ads targeted to individual consumers. NebuAd and CenturyTel get paid whenever a consumer clicks on an ad.
This technique -- called behavioral targeting -- is far more customized than the current method of selling ads online. Today, it's an imperfect process: companies such as Revenue Science Inc. and Tacoda Inc., which was recently bought by Time Warner Inc., contract with Web sites to monitor which consumers visit them, attaching "cookies," or small pieces of tracking data, to visitors' hard drives so they are recognized when they return. The targeting firms feed the data to Web site owners, who use it to charge premium rates for customized ads. But the information is limited, since the tracking companies can't monitor all of the sites an individual visits.
The newer form of behavioral targeting involves placing gear called "deep-packet inspection boxes" inside an Internet provider's network of pipes and wires. Instead of observing only a select number of Web sites, these boxes can track all of the sites a consumer visits, and deliver far more detailed information to potential advertisers.
Until now, the booming online ad market has been dominated by the likes of Google Inc. and Microsoft Corp. and small techie advertising shops such as Right Media Inc. and AdECN Inc. But new companies are rushing in. Both wireless and wireline Internet-access providers such as CenturyTel, Rochester Telecom Systems Inc. and Embarq Communications Inc., among others, have entered the advertising gold rush. And they've tapped Internet equipment companies like NebuAd, FrontPorch Inc., and Phorm Inc. to provide the gear to help them along.
The technology does raise privacy issues. The Internet-service providers often know other information about consumers, such as their names, locations and age and income ranges, which can be very valuable to potential advertisers, especially when combined with Web browsing habits. "Some of these [Internet equipment] guys are traveling in dangerous territory," says Emily Riley, an advertising analyst with Jupiter Research. "Should one company have all of that data in one place? It's a little troubling."
The idea of matching online and offline information about individual consumers has raised privacy concerns in the past. Many of the major online ad companies have pledged to abide by voluntary standards put forth by the Network Advertising Initiative, an industry group, which call for members to notify consumers that they are being targeted and give them the chance to opt out.
NebuAd says that it isn't a member of the group and that the information provided by the ISPs is fairly standard data that they often make available to third parties. FrontPorch also says it believes it isn't going too far by receiving a small amount of offline user data.
Privacy advocates say transparency is key. "Consumers need to know exactly what is going on and they need to know it at all times," says John Palfrey, executive director of the Berkman Center for the Internet and Society at Harvard University. "Today they say they are using consumer information for ads, but it could be something completely different tomorrow. The ISPs and the companies they are working with need to share as much information as possible."
Some Internet providers are reworking their privacy policies to pre-empt concerns. Many give customers online fact sheets informing them of their new behavioral targeting service along, and ask if they want to participate. If they opt out, the consumers' Internet address is tagged and their Web activity isn't tracked.
If a consumer doesn't opt out of the service, the equipment companies say they take steps to shield a consumer's privacy. NebuAd, for instance, says it doesn't keep a consumer's personally identifiable information, but only builds a profile of a consumer's interests based on the sites a user frequents. The company also doesn't track traffic to sites related to sex, health or politics.
Internet access providers say they take the privacy concerns seriously. "Privacy is a huge issue that you must get right," says Dan Toomey, chief executive of Anacapa Holdings Ltd., a Dublin, Ireland-based company that provides wireless Internet access. "One mistake could spell big trouble." Anacapa, which began using FrontPorch's equipment in September, operates 2,400 wireless Internet networks at hotels and coffee shops in 18 countries in Europe. The company allows consumers to use their wireless Internet service for free in exchange for viewing ads.
The use of the new networking gear to observe online behavior -- while currently nascent -- is growing. Zachary Britton, FrontPorch's chief executive, says his company's advertising business generated $15 million in the first nine months of the year, up 187% from the year-earlier period. The company has signed up 202 new customers for its deep packet inspection boxes this year. Meanwhile, NebuAd is expecting revenue of $100 million in 2008 based on sales of its advertising equipment. NebuAd Chief Executive Bob Dykes says the company has signed up more than 30 new customers, mostly Internet access providers, since it started.
For CenturyTel, the new business has already turned into a healthy sideline. The company estimates it will see a 5% to 10% boost in average revenue per user for its high-speed Internet business, with extra revenue totaling around $2 million a quarter. "We need new revenue streams to survive," says Chris Mangum, vice president of strategic planning of CenturyTel, which notifies its consumers of the behavioral targeting in an online fact sheet and allows them to opt out.
Having been initially skeptical, Mr. Mangum says, "We're now comfortable with how we approach this," says Mr. Mangum. CenturyTel says it's too early to tell what percentage of customers have opted out.
Read more
More Players, Privacy Fears
By BOBBY WHITE - The Wall Street Journal - December 6, 2007
CenturyTel Inc., a Monroe, La., phone company that provides Internet access and long-distance calling services, is facing stiff competition from cellphone companies and cable operators. So to diversify, it's getting into the online-advertising business.
And not just any online advertising. The technology it's using could change the way the $16.9 billion Internet ad market works, bringing in a host of new players -- and giving consumers fresh concerns about their privacy.
CenturyTel's system allows it to observe and analyze the online activities of its Internet customers, keeping tabs on every Web site they visit. The equipment is made by a Silicon Valley start-up called NebuAd Inc. and installed right into the phone company's network. NebuAd takes the information it collects and offers advertisers the chance to place online ads targeted to individual consumers. NebuAd and CenturyTel get paid whenever a consumer clicks on an ad.
This technique -- called behavioral targeting -- is far more customized than the current method of selling ads online. Today, it's an imperfect process: companies such as Revenue Science Inc. and Tacoda Inc., which was recently bought by Time Warner Inc., contract with Web sites to monitor which consumers visit them, attaching "cookies," or small pieces of tracking data, to visitors' hard drives so they are recognized when they return. The targeting firms feed the data to Web site owners, who use it to charge premium rates for customized ads. But the information is limited, since the tracking companies can't monitor all of the sites an individual visits.
The newer form of behavioral targeting involves placing gear called "deep-packet inspection boxes" inside an Internet provider's network of pipes and wires. Instead of observing only a select number of Web sites, these boxes can track all of the sites a consumer visits, and deliver far more detailed information to potential advertisers.
Until now, the booming online ad market has been dominated by the likes of Google Inc. and Microsoft Corp. and small techie advertising shops such as Right Media Inc. and AdECN Inc. But new companies are rushing in. Both wireless and wireline Internet-access providers such as CenturyTel, Rochester Telecom Systems Inc. and Embarq Communications Inc., among others, have entered the advertising gold rush. And they've tapped Internet equipment companies like NebuAd, FrontPorch Inc., and Phorm Inc. to provide the gear to help them along.
The technology does raise privacy issues. The Internet-service providers often know other information about consumers, such as their names, locations and age and income ranges, which can be very valuable to potential advertisers, especially when combined with Web browsing habits. "Some of these [Internet equipment] guys are traveling in dangerous territory," says Emily Riley, an advertising analyst with Jupiter Research. "Should one company have all of that data in one place? It's a little troubling."
The idea of matching online and offline information about individual consumers has raised privacy concerns in the past. Many of the major online ad companies have pledged to abide by voluntary standards put forth by the Network Advertising Initiative, an industry group, which call for members to notify consumers that they are being targeted and give them the chance to opt out.
NebuAd says that it isn't a member of the group and that the information provided by the ISPs is fairly standard data that they often make available to third parties. FrontPorch also says it believes it isn't going too far by receiving a small amount of offline user data.
Privacy advocates say transparency is key. "Consumers need to know exactly what is going on and they need to know it at all times," says John Palfrey, executive director of the Berkman Center for the Internet and Society at Harvard University. "Today they say they are using consumer information for ads, but it could be something completely different tomorrow. The ISPs and the companies they are working with need to share as much information as possible."
Some Internet providers are reworking their privacy policies to pre-empt concerns. Many give customers online fact sheets informing them of their new behavioral targeting service along, and ask if they want to participate. If they opt out, the consumers' Internet address is tagged and their Web activity isn't tracked.
If a consumer doesn't opt out of the service, the equipment companies say they take steps to shield a consumer's privacy. NebuAd, for instance, says it doesn't keep a consumer's personally identifiable information, but only builds a profile of a consumer's interests based on the sites a user frequents. The company also doesn't track traffic to sites related to sex, health or politics.
Internet access providers say they take the privacy concerns seriously. "Privacy is a huge issue that you must get right," says Dan Toomey, chief executive of Anacapa Holdings Ltd., a Dublin, Ireland-based company that provides wireless Internet access. "One mistake could spell big trouble." Anacapa, which began using FrontPorch's equipment in September, operates 2,400 wireless Internet networks at hotels and coffee shops in 18 countries in Europe. The company allows consumers to use their wireless Internet service for free in exchange for viewing ads.
The use of the new networking gear to observe online behavior -- while currently nascent -- is growing. Zachary Britton, FrontPorch's chief executive, says his company's advertising business generated $15 million in the first nine months of the year, up 187% from the year-earlier period. The company has signed up 202 new customers for its deep packet inspection boxes this year. Meanwhile, NebuAd is expecting revenue of $100 million in 2008 based on sales of its advertising equipment. NebuAd Chief Executive Bob Dykes says the company has signed up more than 30 new customers, mostly Internet access providers, since it started.
For CenturyTel, the new business has already turned into a healthy sideline. The company estimates it will see a 5% to 10% boost in average revenue per user for its high-speed Internet business, with extra revenue totaling around $2 million a quarter. "We need new revenue streams to survive," says Chris Mangum, vice president of strategic planning of CenturyTel, which notifies its consumers of the behavioral targeting in an online fact sheet and allows them to opt out.
Having been initially skeptical, Mr. Mangum says, "We're now comfortable with how we approach this," says Mr. Mangum. CenturyTel says it's too early to tell what percentage of customers have opted out.
Read more
House Subcommittee To Investigate FCC
By Radio INK - Dec. 6, 2007
WASHINGTON -- December 4, 2007: House Commerce Committee Chairman John Dingell (D-MI) told FCC Chairman Kevin Martin in a letter Monday that he's concerned about "procedural breakdowns" at the FCC and that the Commerce Committee's Subcommittee on Oversight and Investigation will be conducting a probe into the agency.
"Given several events and proceedings over the past year, I am rapidly losing confidence that the commission has been conducting its affairs in an appropriate manner," Dingell wrote to Martin. Though he said it's not true in the case of every proceeding, Dingell said that "a trend appears to be emerging of short-circuiting procedural norms, suggesting a larger breakdown at the agency."
He continued, "For instance, the commission does not put the text of proposed rules out for notice and comment; there is little public notice of certain proposed commission actions; and commissioners are often not informed of the details of draft items until it is too late to provide the necessary scrutiny and analysis that is so important to reasoned decisionmaking."
Martin and the four other FCC commissioners are all on the witness list for a hearing on media ownership by Commerce's Subcommittee on Telecommunications and the Internet, set for 9:30 a.m. tomorrow.
WASHINGTON -- December 4, 2007: House Commerce Committee Chairman John Dingell (D-MI) told FCC Chairman Kevin Martin in a letter Monday that he's concerned about "procedural breakdowns" at the FCC and that the Commerce Committee's Subcommittee on Oversight and Investigation will be conducting a probe into the agency.
"Given several events and proceedings over the past year, I am rapidly losing confidence that the commission has been conducting its affairs in an appropriate manner," Dingell wrote to Martin. Though he said it's not true in the case of every proceeding, Dingell said that "a trend appears to be emerging of short-circuiting procedural norms, suggesting a larger breakdown at the agency."
He continued, "For instance, the commission does not put the text of proposed rules out for notice and comment; there is little public notice of certain proposed commission actions; and commissioners are often not informed of the details of draft items until it is too late to provide the necessary scrutiny and analysis that is so important to reasoned decisionmaking."
Martin and the four other FCC commissioners are all on the witness list for a hearing on media ownership by Commerce's Subcommittee on Telecommunications and the Internet, set for 9:30 a.m. tomorrow.
House Subcommittee Questions FCC On Media Ownership
By Radio INK - Dec. 6, 2007
WASHINGTON -- December 5, 2007: The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing Wednesday focusing on media ownership and other issues before the FCC, with FCC Chairman Kevin Martin and all four Commissioners in attendance.
Commerce Committee Chairman John Dingell (D-MI) in his opening statement reiterated the points he made in his letter to Martin earlier this week, saying he's seen "too much sniping among the Commissioners" and adding, "We've heard too many too many tales of short-circuited decisionmaking processes."
"The FCC appears to be broken," Dingell said. "The victim of this breakdown is a fair, open, and transparent regulatory process." He said it would be "intolerable" to let the situation continue and added, "This is why I've asked the Subcomittee on Oversight & Investigation of this committee to review how the agency is conducting its business."
As Martin began his prepared testimony, he stated that he is committed to "a robust marketplace of ideas" that is focused on "competition, diversity, and localism." He then ran down the FCC's efforts in the current media-ownership proceeding, citing the six public hearings, 10 commissioned studies, and extended public comment periods in the proceeding, then moved on to the rationale behind what he called his "relatively minor" proposal to loosen the newspaper-broadcast cross-ownership ban in the top 20 markets.
Martin cited past and pending personnel cuts at major-market newspapers to support his point that the newspaper industry is struggling and said, "We cannot turn a blind eye to the financial condition in which these companies find themselves." Allowing cross-ownership "may help forestall erosion" in the industry by allowing newsgathering and other costs to be shared.
On ownership diversity, Martin pointed to the FCC's recent revision of the low-power FM rules and said he has circulated an order that is designed to "promote diversity by increasing and expanding broadcast-ownership opportunities for small businesses, including minority- and women-owned businesses."
That order, he said, adopts most of the Minority Media and Telecommunications Council's proposals and those of the FCC's own Diversity Committee.
FCC Commissioner Michael Copps began his testimony by saying the FCC is "lurching dangerously off-course" and "giving short shift to pressing problems."
He said Martin's proposal is not a "moderate relaxation" of the newspaper-broadcast ban, but an opening for cross-ownership waivers in all markets. The conditions for a waiver, he said, "are as tough as a bowl of Jell-O," then got a laugh when said, "I have about as much confidence that a proposed combination will be turned down as I do that the next commission meeting will start on time."
Copps repeated his oft-stated desire for a new localism proceeding and called Martin's scheduled December 18 vote on his ownership proposal "an unseemly rush to judgment."
Adelstein began, "No issue on our agenda has more far-reaching consequences for the future of our democracy than this one," and cited the "bipartisan chorus of opposition to media consolidation." He echoed Copps' point that the waiver guidelines are too loose, though he said they amount to a "wet noodle" rather than Jell-O.
When the questioning began, Subcommittee Chairman Ed Markey (D-MA), asked whether the waiver requirements for markets below the top 20 is a "high hurdle, or just a speed bump." Martin said he intended the requirements to be a hurdle and said, "I absolutely would be willing to work with [the other Commissioners] on finding language to make them feel more comfortable that this is a high hurdle."
Later, Rep. Chip Pickering (R-MS) asked if the waiver conditions constitute a loophole that would "allow someone to drive a truck through." Martin responded, "It's not true that it is a loophole you can drive a truck through." He said the FCC has always allowed waiver filings, though the presumption under the new rules would be that newspaper-broadcast cross-ownership waivers in smaller markets would be against the public interest.
The waiver conditions would also take financial distress into account, he said -- "as we traditionally have in waivers" -- as well as the properties' willingness to "start new news -- if they're willing to create a new local news voice."
Copps, however, said, "This is a loophole. These factors that we are going to consider are so generic, they're so porous -- maybe it's the new media-ownership sponge, I don't know what it is -- but they scare the heck out of me."
Adelstein said that even if a property promises just "10 minutes more of news a year" or "one half-hour special," that would qualify for a waiver, and added, "I can't imagine a more porous standard."
Martin responded, "We did not say that would qualify for a waiver. That's not what the order says. What we said is, you can apply for a waiver, and these are the criteria we would consider. We did not say that you would qualify for it."
But Adelstein insisted, "The waiver standard says 'more news.' That's the only standard -- 'more news.' So what is 'more news'? There's no definition if it's five minutes, 10 minutes, or 50 hours. So theoretically, under that standard, 10 minutes can qualify."
Subcommittee Ranking Member Fred Upton (R-MI), who in his opening statement expressed support for further deregulation of radio ownership, asked why Martin hasn't supported radio deregulation. "The numbers are in," Upton said, "and we know that the [radio] industry is doing far worse today than at any time in the past. Isn't this the same situation you're trying to address for newspapers?"
Martin responded, "The most significant difference in what was occurring in the radio market and the newspaper-broadcast cross-ownership ban is that the radio market and the radio owners received some significant amount of ownership relief in 1996." In contrast, the newspaper-broadcast ban has been in place since 1975.
Reps. Hilda Solis (D-CA) and Charles Gonzalez (D-TX) both addressed ownership diversity, and Gonzalez asked Martin about the biggest obstacles to minority ownership and how the FCC plans to address the issue. "The two biggest obstacles are access to capital and access to new stations," Martin said. The FCC is addressing that, he said, by identifying where new stations are available; opening other broadcast avenues, such as LPFM; and waiving some rules for new entrants to the industry, including allowing expired construction permits to designated entities and changing the equity-plus-debt rule so other broadcasters can help finance new entrants. Martin also noted that the commission has unanimously supported the return of the minority tax certificate.
Solis raised the issue of private equity ownership in media and "transparency on who the owners really are" in those cases. "What steps will you take to make that known?" she asked. Martin said the same rules for ownership attribution apply to private equity owners as to any other, but Copps said, "Private equity is transforming the media-ownership environment."
Copps went on, "Instead of publicly held corporations, which you can at least track, and file 10(K) forms with the SEC, you have these private money funds which don't have to file. I can't find out who owns what." He said, "How can I do my job of protecting the public interest if I can't even find out who owns what?"
WASHINGTON -- December 5, 2007: The House Commerce Committee's Subcommittee on Telecommunications and the Internet held a hearing Wednesday focusing on media ownership and other issues before the FCC, with FCC Chairman Kevin Martin and all four Commissioners in attendance.
Commerce Committee Chairman John Dingell (D-MI) in his opening statement reiterated the points he made in his letter to Martin earlier this week, saying he's seen "too much sniping among the Commissioners" and adding, "We've heard too many too many tales of short-circuited decisionmaking processes."
"The FCC appears to be broken," Dingell said. "The victim of this breakdown is a fair, open, and transparent regulatory process." He said it would be "intolerable" to let the situation continue and added, "This is why I've asked the Subcomittee on Oversight & Investigation of this committee to review how the agency is conducting its business."
As Martin began his prepared testimony, he stated that he is committed to "a robust marketplace of ideas" that is focused on "competition, diversity, and localism." He then ran down the FCC's efforts in the current media-ownership proceeding, citing the six public hearings, 10 commissioned studies, and extended public comment periods in the proceeding, then moved on to the rationale behind what he called his "relatively minor" proposal to loosen the newspaper-broadcast cross-ownership ban in the top 20 markets.
Martin cited past and pending personnel cuts at major-market newspapers to support his point that the newspaper industry is struggling and said, "We cannot turn a blind eye to the financial condition in which these companies find themselves." Allowing cross-ownership "may help forestall erosion" in the industry by allowing newsgathering and other costs to be shared.
On ownership diversity, Martin pointed to the FCC's recent revision of the low-power FM rules and said he has circulated an order that is designed to "promote diversity by increasing and expanding broadcast-ownership opportunities for small businesses, including minority- and women-owned businesses."
That order, he said, adopts most of the Minority Media and Telecommunications Council's proposals and those of the FCC's own Diversity Committee.
FCC Commissioner Michael Copps began his testimony by saying the FCC is "lurching dangerously off-course" and "giving short shift to pressing problems."
He said Martin's proposal is not a "moderate relaxation" of the newspaper-broadcast ban, but an opening for cross-ownership waivers in all markets. The conditions for a waiver, he said, "are as tough as a bowl of Jell-O," then got a laugh when said, "I have about as much confidence that a proposed combination will be turned down as I do that the next commission meeting will start on time."
Copps repeated his oft-stated desire for a new localism proceeding and called Martin's scheduled December 18 vote on his ownership proposal "an unseemly rush to judgment."
Adelstein began, "No issue on our agenda has more far-reaching consequences for the future of our democracy than this one," and cited the "bipartisan chorus of opposition to media consolidation." He echoed Copps' point that the waiver guidelines are too loose, though he said they amount to a "wet noodle" rather than Jell-O.
When the questioning began, Subcommittee Chairman Ed Markey (D-MA), asked whether the waiver requirements for markets below the top 20 is a "high hurdle, or just a speed bump." Martin said he intended the requirements to be a hurdle and said, "I absolutely would be willing to work with [the other Commissioners] on finding language to make them feel more comfortable that this is a high hurdle."
Later, Rep. Chip Pickering (R-MS) asked if the waiver conditions constitute a loophole that would "allow someone to drive a truck through." Martin responded, "It's not true that it is a loophole you can drive a truck through." He said the FCC has always allowed waiver filings, though the presumption under the new rules would be that newspaper-broadcast cross-ownership waivers in smaller markets would be against the public interest.
The waiver conditions would also take financial distress into account, he said -- "as we traditionally have in waivers" -- as well as the properties' willingness to "start new news -- if they're willing to create a new local news voice."
Copps, however, said, "This is a loophole. These factors that we are going to consider are so generic, they're so porous -- maybe it's the new media-ownership sponge, I don't know what it is -- but they scare the heck out of me."
Adelstein said that even if a property promises just "10 minutes more of news a year" or "one half-hour special," that would qualify for a waiver, and added, "I can't imagine a more porous standard."
Martin responded, "We did not say that would qualify for a waiver. That's not what the order says. What we said is, you can apply for a waiver, and these are the criteria we would consider. We did not say that you would qualify for it."
But Adelstein insisted, "The waiver standard says 'more news.' That's the only standard -- 'more news.' So what is 'more news'? There's no definition if it's five minutes, 10 minutes, or 50 hours. So theoretically, under that standard, 10 minutes can qualify."
Subcommittee Ranking Member Fred Upton (R-MI), who in his opening statement expressed support for further deregulation of radio ownership, asked why Martin hasn't supported radio deregulation. "The numbers are in," Upton said, "and we know that the [radio] industry is doing far worse today than at any time in the past. Isn't this the same situation you're trying to address for newspapers?"
Martin responded, "The most significant difference in what was occurring in the radio market and the newspaper-broadcast cross-ownership ban is that the radio market and the radio owners received some significant amount of ownership relief in 1996." In contrast, the newspaper-broadcast ban has been in place since 1975.
Reps. Hilda Solis (D-CA) and Charles Gonzalez (D-TX) both addressed ownership diversity, and Gonzalez asked Martin about the biggest obstacles to minority ownership and how the FCC plans to address the issue. "The two biggest obstacles are access to capital and access to new stations," Martin said. The FCC is addressing that, he said, by identifying where new stations are available; opening other broadcast avenues, such as LPFM; and waiving some rules for new entrants to the industry, including allowing expired construction permits to designated entities and changing the equity-plus-debt rule so other broadcasters can help finance new entrants. Martin also noted that the commission has unanimously supported the return of the minority tax certificate.
Solis raised the issue of private equity ownership in media and "transparency on who the owners really are" in those cases. "What steps will you take to make that known?" she asked. Martin said the same rules for ownership attribution apply to private equity owners as to any other, but Copps said, "Private equity is transforming the media-ownership environment."
Copps went on, "Instead of publicly held corporations, which you can at least track, and file 10(K) forms with the SEC, you have these private money funds which don't have to file. I can't find out who owns what." He said, "How can I do my job of protecting the public interest if I can't even find out who owns what?"
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